What a year this has been in our economy, geopolitically and especially for the financial markets. For many people retiring or nearing retirement, these issues add up to some significant barriers to preparing for their golden years.
For much of the last 13 years, markets have produced positive returns (opens in a new tab), according to Macrotrends, and thus provided many with the feeling that their golden years would be filled with security and financial stability. However, the events of this year seem to have caused many of those positive feelings to turn into anxiety and worry about what the future holds.
Proper preparation for your retirement should not be ignored, especially at times like this. Barriers to taking appropriate action have seemingly always existed. Whether it’s not really about making time to plan or even knowing where to start, preparing for the next phase of life should No to be ignored, especially in times like these.
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Let’s explore some of those retirement barriers and possible solutions:
Retirement barrier: you are paralyzed by the volatility of the markets
With so much attention recently paid to volatility in financial markets, it can seem “overwhelming” to watch our investment balances and future savings fluctuate at levels many haven’t experienced in years. This is causing many to feel “paralyzed” to do anything other than “bury their heads in the sand” until this volatility passes.
Solution: It’s been said for years, but “Control what you can control!“We really have nothing to say about what happens in the markets, but you can still take positive steps to develop and implement meaningful retirement strategies. Understand that your retirement could last for years, which means this probably won’t be the last time we’ll see markets like this, so let’s take steps to prevent retirement from being disrupted in the future.
Retirement barrier: you don’t have a retirement mindset
Understand that your retirement is more than just a collection of “uncoordinated” investment accounts you’ve built up over the years. Retirement is moving from the “accumulation” phase of life to the “preservation and distribution” phase of life. realize that there is very clear differences between being a good saver and knowing how to conserve and spend wealth. Think about climbing Mount Everest and the different challenges you face going up that mountain versus coming back down.
Solution: Comprehension everybody the areas of your own “financial house” and how you may need to take a more active approach to things that were once on “autopilot.” For example, during his working years, he had the ability to earn a paycheck. However, he will now have to “create” his retirement checks through a combination of the wealth he has accumulated, Social Security time, and pension elections (if applicable).
In addition to managing investments, a strong retirement plan should include a plan for generating predictable monthly income, tax minimization strategies, health care options, and legacy planning. Regardless of what is currently happening in the financial markets, here are five areas of your retirement that you can plan for effectively.
Retirement barrier: you don’t know where to start
Like many other aspects of life, knowing how and where to start preparing for the transition to retirement can be the hardest part. Realize that you are in the majority if this part of the process can seem overwhelming and cause you to procrastinate. Pushing and taking small first steps will help create the momentum you need.
Solution: First, understand what exactly your need and that exactly your want. For example, do you I really want and it’s you engaged to develop a comprehensive retirement plan that includes investment management, income planning, tax strategies, legacy wishes, and health care? There is a significant difference between wanting and needing an advisor or portal to manage investment accounts or purchase an insurance product. Once you take stock and determine what you really need, you’ll be ready to face the next barrier.
Retirement barrier: you don’t understand the world of advisory services and platforms
All advisors and platforms are not created equal. Some platforms are designed for those who prefer to self-manage their retirement compared to those designed with a more complete offer of advice and services. Some of these may be low-cost investments for do-it-yourselfers, those who want investment management for a fee, or those who are more comprehensive and planning-focused.
Solution: Let’s explore your options.
- DIY platforms. These are designed for those who prefer to manage their own retirement but need access to low-cost brokerage accounts like those offered by Vanguard. (opens in a new tab) and TD Ameritrade (opens in a new tab). Advice can be limited with these platforms and is generally designed for those who want to devise their own investment strategies.
- Focused on investment or product. Many advisors offer services dedicated primarily to investment management. Advice can be provided for a fee, which is usually a percentage of the assets being managed. Advisors could also focus their practice on offering insurance-based solutions and products, such as annuities, life insurance, or even long-term care policies, any of which could have value if used to meet a particular need.
- Focused on planning. Advisors who have a planning-focused practice will typically focus their efforts on designing, recommending, and implementing financial strategies that are more comprehensive than just investment management or product selection. Focus areas typically involve investment management, but may also include retirement income planning, tax strategies, health and long-term care options, and wealth considerations. Fees may include an annual asset-based fee, a one-time planning fee, or a combination of both. In short, advisors in this space typically focus on making recommendations and choosing solutions (both investment and insurance) based on your retirement as a whole.
Let’s focus on controlling what we can control and removing those barriers in preparation for a incredible Retirement.
Investment advisory services offered through Trek Financial LLC, (Trek) an SEC registered investment adviser. The information presented is for educational purposes only. It should not be considered specific investment advice, does not take into account your specific situation, and is not intended to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, please consult with a qualified tax professional before implementing any strategy discussed in this document. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Financial products and services, if recommended, may include investment advisory fees, commissions and/or other charges. TREK 455
This article was written by and presents the views of our contributing consultant, not the Kiplinger editorial team. You can check the advisors’ records with the SEC (opens in a new tab) or with FINRA (opens in a new tab).
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